Mobile number portability in Indian and American telecom markets
Telecom Lead India: India is the second most populous nation, one of the BRIC emerging economic powers, and the second largest and fastest growing mobile market in the world with near one billion subscribers. With a lack of physical infrastructure, evidenced by a low penetration of fixed telephony, most in India regard mobile communications as a critical element in today's environment. The Telecom Regulatory Authority of India introduced Mobile Number Portability in early 2011. This paper describes the mobile telecommunications market in India, examines the implementation of MNP, and provides a brief comparison to the United States' MNP market, concluding that there are significant differences between the two countries' approach and results.
The telecommunications market in India is unlike any other country. India has 15 mobile carriers in a highly competitive, predominantly pre-paid market in other words largely driven by the subscriber's unremitting efforts to secure better pricing. About 96 percent of all mobile subscribers elect for a prepaid service, and those subscribers are constantly transitioning between mobile service providers to realize incrementally lower prices. Unlike most developed markets, including the United States, many mobile subscribers in India have the option of using devices with multi-service/SIM card capability. This allows the mobile subscriber to switch service providers simply by activating the SIM card associated with the most preferential rates then. It is reported that 57 percent of all handsets shipped in India in 2011 had multiple-service/SIM capabilities, which provide a choice of up to four mobile carriers within a single device.
Because India is overwhelmingly a prepaid market, there is little loyalty between subscribers and mobile carriers. As a result, one of the implications of the preponderance of multi-SIM device is that mobile carriers have little incentive to invest in the overall consumer experience, including that surrounding MNP. Mobile subscribers in India forgo the simplicity of retaining their identity through a single telephone number in other words relevant far beyond personal identification for voice calls or text messages.
Mobile Number Portability enables subscribers to keep their telephone numbers when switching from one mobile provider to another. It has the potential to convey significant benefits to the consumer by lowering barriers to competition. MNP was licensed in India in April 2009, and was launched in January 2011.5 By the time India fully embraced MNP, over 70 countries worldwide had already implemented portability solutions. The local regulator, TRAI, adopted an unconventional, multiple-administrator solution for MNP, making India one of only two countries worldwide to adopt such an approach. Two MNP administrators are dually responsible for orchestrating the transfer of telephone numbers between mobile carriers, each using a distinct platform and infrastructure in distinct service areas.
The MNP system is limited in scope in that it only allows mobile subscribers to transfer their telephone numbers when moving to a new mobile carrier. Similar services do not extend to fixed wireline or voice over Internet protocol services.
The first year of MNP
After the first year of MNP, provisional conclusions can be drawn as to its success. The number of subscribers opting for MNP as a percentage of overall churn is relatively small, suggesting that MNP has had limited impact on competition. Moreover, evidence has emerged of significant subscriber dissatisfaction with the process, as measured by long delays and high volumes of complaints to the regulator. Over 25 percent of consumers' requests to transfer their telephone numbers between January 2011 and November 2011 were rejected or abandoned. TRAI acknowledged that there was very high porting rejection rates and directed the operators to address the issue.
The number portability environment for the United States is significantly different from that in India. The combination of substantial adoption of fixed, mobile, and VoIP (Voice over Internet Protocol) communications; a largely post-paid subscriber base; and a strong consumer interest in number portability contributes to a wholly different experience in the United States when compared with India.
The United States spans network technologies
Number portability in the United States spans network technologies, allowing subscribers to transfer their telephone numbers among fixed line, mobile, and VoIP services.
The LNP registry can as well be used by service providers to perform important network management activities.
Most critically, portability makes up a significantly larger percentage of overall subscriber churn in the United States' mobile market "" about four times larger than in India. Evidence bears out that a subscriber in a post-paid contract with richer services tends to maintain a higher affinity for their telephone number than does a pre-paid subscriber who carries multiple SIM cards for a single device. The data implies that portability in the United States is far more critical to sustaining expected levels of competition, and even more, that any disruptions or issues with the porting process would have a far more deleterious effect for the consumer.
The differences between the United States
The differences between the United States and India are evidence of the fact that communications markets and the drivers of consumer demand are not the same worldwide. The United States and India are both large democracies with growing telecom markets, nevertheless the experience of one communications market with number portability is not transferable to another market. In actual fact, the factors leading to a successful mobile number portability experience could not be more distinct between the two countries. One need only compare the post-paid and pre-paid nature of the two marketplaces. As such, regulators and service providers should rely on the characteristics of their respective markets when making decisions regarding number portability henceforth.
India is the world's largest democracy with a population of over 1.2 billion people. Unlike the United States and other developing countries, India suffers from poor private and public infrastructure. This, along with ranking second behind China as the most populated country in the world and other factors, has led to a proliferation of mobile phone growth with near one billion subscribers in India today.
The Indian mobile phone market is made up of 22 service areas, often referred to as "circles." Calls between circles are categorized as long distance calls. Currently, there are 15 mobile carriers in India although not all of these carriers serve all of the geographic "circles."
In India, mobile subscribers have access to predominantly 2G services and feature phones. As depicted below, the penetration of 3G mobile phone subscribers in India is in its infancy compared to the United States market. An expansion to 3G/4G services tends to stabilize and increase ARPU. It is projected that by 2016, 3G penetration in the United States will be in broad outline 68 percent compared to about 16 percent in India.
The United States
Unlike mobile devices in the United States, many mobile devices in India accommodate two SIM cards. Some of the newer models accommodate as many as four SIM cards, which may be a combination of GSM and CDMA innovation. The growth in multi-SIM card phones has been phenomenal. In the second quarter of 2009, multi-SIM card phones were less than 1 percent of all handsets shipped in India, increasing to 38.5 percent in the second quarter of 2010. In 2011, 57 percent of the total shipments of phone handsets were capable of holding multi-SIM cards.
Subscribers in India use multiple SIM cards to facilitate switching from one carrier to another, as prepaid subscriptions terminate. In substance, multi-SIM card phones, in combination with prepaid and unlocked service, lead to low ARPU and low barriers to exit for subscribers. Their use highlights a low subscriber affinity for retaining a single phone number. Opposite to the United States market, where a phone and phone service tend to be sold as a bundled product typically by the operator, the handset and the phone service are sold unbundled in India. To boot, the United States bundled product is sold for a 'lock-in' duration; two year contracts are usual. This tends to tie the United States' subscriber to the carrier for the period of the contract.
The potential candidates for number portability
Subscribers that churn are the potential candidates for number portability, and in India, a subscriber is permitted to port their number every 90 days if they wish. Nevertheless, when one looks at the proportion of churning subscribers that take their telephone numbers with them, it is evident how insignificant MNP is to the mobile subscriber in India. This appears to be a fundamental difference in how the subscribers in the two markets react to MNP. Opposite to the United States, in India subscribers are moving to new mobile carriers without taking their phone numbers with them.
A mobile subscriber in India can prepay for service for as low as $1 and get 500 minutes of use. Mobile phone service in India only entails paying for outgoing calls, with calls being billed by the second. With typically shorter call durations, a $1 prepay can last for quite some time. As shown in the chart below, the average minutes of use for a typical subscriber of AT&T is about 1.5 times that of Airtel and about 2.8 times that of Reliance.
The preceding discussion demonstrates that the telecommunications market in India is significantly different than that in the United States.
Mobile Number Portability enables subscribers to keep their telephone numbers when switching from one mobile provider to another. MNP raises the level of competitiveness among carriers to retain their subscribers with the best network quality, price, and other offers.
The port request
Upon successful initiation of the port request, the MNP administrator orchestrates a series of information exchanges between the new and existing mobile carrier20 to transfer the telephone number. When in other words completed, the information is at that time downloaded to all carriers and access providers in all circles via a periodic file transfer that ultimately enables updated routing. The end-to-end process tolerates subscribers being completely out of service for up to two hours while the transition to their new mobile carrier.
While it is too early to definitively predict the growth of MNP, evidence suggests that the majority of prepaid subscribers "are not concerned about retaining their number and change between networks for short-term gains as their credits run out." Once the majority of the already small post-paid pool is accounted for, this would imply low porting rates going forward.
Indian subscribers frequently switch carriers to achieve better pricing. Prepaid plans with few lock-in requirements and wide adoption of multiple SIM devices have influenced the subscriber away from attaching importance to telephone numbers. Moreover, subscribers are unlikely to wait for seven days or more to retain their telephone numbers when they can switch providers in minutes by giving up their telephone number.
The MNP environment for the United States is significantly different from that in India. The combination of market saturation, a large post-paid subscriber base, and a consumer-focused legislative mandate has created high affinity for consumers and businesses with respect to their telephone numbers. Noting this, and recognizing that disruptions in portability have a significant impact on competition, the United States communications industry, in cooperation with the FCC, has placed a high premium on the porting experience. For instance:
The United States can span network technologies
Number portability in the United States can span network technologies, allowing clients to transfer their telephone numbers at will between fixed, mobile, and VoIP carriers.
The United States registry is as well used by service providers to perform important network management activities.
In India, competition in communications is driven by a relentless drive for incrementally lower pricing. It appears consequently that many of the items that receive a high level of focus in the United States may be less critical for India, which leads to different priorities for the regulator and service providers in India. Many decisions related to the deployment of MNP, including, nevertheless not limited to the reliance on multiple LNP administrators, as well reflect the fact that performance and research are not the highest driving concerns.
The same worldwide
Communications markets are not the same worldwide, and the experience of one communications market with portability is not likely to produce anything transferable to another market. The United States and India are both large democracies with growing telecom markets, however the factors which drive a successful mobile number portability experience could not be more distinct between the two countries. In short, regulators and service providers should rely solely on the characteristics of their respective markets when making decisions regarding number portability henceforth.
W. Bruce Allen, professor of Business and Public Policy, The Wharton School, University of Pennsylvania and visiting professor, Indian School of Business
India Telecom Market
America Base Mobile Numbers In India
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